This Startup Hacked LinkedIn To Recruit Customers & Reduce Churn

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A version of this article previously appeared in Forbes.

Businesses typically use LinkedIn to recruit employees. However, savvy startups can leverage LinkedIn to create a customer acquisition and a churn reduction tool. In particular, one of Rincon Venture Partner’s portfolio companies, SimpleLegal, has had so much success mining LinkedIn for customers that the CEO was initially reluctant for me to name his company in this article, fearing his competitors will mimic their common sense, yet clever approach.

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Follow The People

Simply put, SimpleLegal pro-actively monitors the LinkedIn profiles of its key users. When a user departs their current employer, the company sends a congratulatory note which secures the continuity of their relationship with the user.

Although LinkedIn is a good source of career changes, the company doesn’t solely rely on it to stay abreast of its users’ careers, as it is a lagging indicator when a user is slow to update their profile. According to Nathan Wenzel, SimpleLegal’s CEO, “In 2016, where information is available on LinkedIn, Twitter, Facebook, blog posts, and more, there’s no excuse to not know what is going on in your customer’s business and in their professional lives. Not knowing about a paper they have published, a talk they have given, or a job change they’ve made is just laziness. There’s no excuse.

Every single former SimpleLegal user that has moved into a General Counsel role at their new employer has implemented SimpleLegal. All of them.”

Tend The Home Fires

When SimpleLegal follows its users into a new organization, there are generally no alternative solutions being used. However, in some cases, especially with its larger customers, the company displaces a competitor. These old-school rivals do not pro-actively track employee turnover at their customers’ organizations and thus they are often caught flat footed when SimpleLegal supplants them.

Although it’s generally good news when one of SimpleLegal’s users moves on in their career, it also exposes the company to potential churn risk. Just as SimpleLegal has success ousting competitors, its Customer Success team must be diligent to avoid being likewise a victim of employee churn.

Thus, when the company is alerted that a key user has departed a current customer, the Customer Success folks provide hands-on training and attention to the account. Once a successor is hired, SimpleLegal ensures that the new member of the team understands and appreciates the utility of its solution.

Per Mr. Wenzel, “When a new key user starts with the company, we call them to introduce ourselves and find how we can be helpful to them in their new role. It’s not about helping them use our software. It’s about helping them achieve their objectives and make a strong first impression.” This hands-on approach is generally sufficient to retain ownership of the account, as evidence by the fact that in the past year, SimpleLegal has only lost one small account due to losing its product champion.

Bro Benefits

A key component of SimpleLegal’s strategy is the strong relationships it establishes with its customers. Per Nathan, “We have several users who have turned to us to help them find new roles after they have left their prior employer. It’s obviously a win for the person looking for their next role. It’s also a win for our customers when we can help them find a talented new hire.”

Treating customers as true collaborators helps breakdown the Us vs. Them dynamic that is often present between software vendors and their customers. As Nathan explains it, “Some users will text us on weekends and at 10pm or 11pm at night about their ideas about the future of Legal Tech. They geek out about this stuff the same way we do.”

Not only do these high-touch associations pay off when a user advances in their career, this affinity also results in high-quality and inexpensive leads through referrals.

As part of the sales process, SimpleLegal sets the expectation that its champions will provide introductions to their fellow colleagues at other companies. SimpleLegal also hosts and sponsors knowledge sharing and networking events that make such introductions relatively easy and mutually beneficial for everyone involved.

This straight forward strategy is effective for SimpleLegal because:

  • Its solution has a clear and economical value prop
  • It maintains a friendly rapport with its key users such that the company’s customer success team is viewed as trusted problem solvers, differentiating it from typical software vendors
  • The switching costs required to displace an incumbent solution are more than offset by SimpleLegal’s incremental functionality
  • It sells into a horizontal market segment which is conscribed enough that many of the professionals know each other, which makes its referral program particularly effective
  • Referrals work well because the close-knit nature of the company’s target market results in users having personal relationships with a number of their peers

Clearly not every industry or product fits the above criteria. However, nearly all businesses can benefit from knowing when their product champions leave for greener pastures, especially when they have established a meaningful relationship they can cultivate throughout the champion’s career.

You can follow John on Twitter: @johngreathouse.

Image credit: Carl Court/Getty Images

John Greathouse is a Partner at Rincon Venture Partners, a venture capital firm investing in early stage, web-based businesses. Previously, John co-founded RevUpNet, a performance-based online marketing agency sold to Coull. During the prior twenty years, he held senior executive positions with several successful startups, spearheading transactions that generated more than $350 million of shareholder value, including an IPO and a multi-hundred-million-dollar acquisition.

John is a CPA and holds an M.B.A. from the Wharton School. He is a member of the University of California at Santa Barbara's Faculty where he teaches several entrepreneurial courses.

Note: All of my advice in this blog is that of a layman. I am not a lawyer and I never played one on TV. You should always assess the veracity of any third-party advice that might have far-reaching implications (be it legal, accounting, personnel, tax or otherwise) with your trusted professional of choice.

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